A scenario that just last month seemed impossible has now become very real: interest rates on student loans really could double. The harsh reality kicked in today when the Senate Democrats failed to advance their stopgap bill that would have once again punted the issue for another year by keeping rates on subsidized rates at 3.4 percent for another year.
“Today our nation’s students once again wait in vain for relief,” Sen Tom Udall (D-NM) said after the vote. “They expected more of us and I share their disappointment.”
What he didn’t say is that deep divisions within his own party was the reason for the failure.
Earlier this year a long-term solution seemed inevitable. President Obama had made a significant step towards the middle by tying student loan interest rates to a market-based rate. This would have prevented the crazy scenario many students now find themselves in – they are paying higher interest rates to go to college, than on the car they bought to get them there. And honestly, which is the better long-term investment – a car, the value of which plummets the second you drive it off the lot, or a college degree, which dramatically increases a person’s lifetime earnings.
Republicans saw this as an opportunity for bipartisanship, so they crafted, then passed, a bill that was close to President Obama’s proposal. Indeed, they made improvements, like including protections for students by setting a cap on how high the rate could go.
Almost immediately Senate Democrats balked. They saw the political leverage they’ve had on the issue (and to which they used to their great advantage in 2012) getting ready to evaporate. Even one of their liberal leaders, Sen. Chuck Schumer, said that playing politics with student loans was “a messaging winner for Democrats.” But a permanent fix, especially one that originated as a conservative idea, threatened to remove the messaging success they’ve had on the issue.
In an attempt to preserve the upper hand, Senate Democrats trotted out yet another one-year fix, in large part to ensure the debate gets repeated in an election year, when they will once again count on students to carry their water in get out the vote efforts.
The problem is that people are beginning to see through the Senate’s charade. The Huffington Post reports:
Many advocates said privately they think Democrats bungled this fight, but none would say so on the record because they are depending on Democrats to advance their policies. “Going into the 2014 elections, one of the things the Democrats have on their side is saying the House Republicans are the problem and they’re not doing anything,” one advocate said. “And here you have the House doing something close to what the White House wanted and the Senate Democrats blocking it. They’ve taken away the narrative of the House being the problem.”
As if to fan the flames of that narrative, Senate Democratic leadership has blocked a bipartisan compromise that was reached by Sens. Joe Manchin (D-WV), Tom Carper (D-DE) and Angus King, an independent who caucuses with Democrats, along with Republican Sens. Tom Coburn (OK), Richard Burr (NC) and Lamar Alexander (TN).
Harry Reid and his liberal cronies even went so far as to schedule a dueling press conference while Manchin, Carper and King were presenting their compromise bill.
Republicans, who long ago passed a bill, and have worked in good faith to try and reach a compromise, are quickly growing tired of the political sideshow at the expense of a final solution.
“Republicans acted to protect students from higher interest rates and make college more affordable, yet Senate Democratic leaders let student loan interest rates double without passing any legislation to address the issue,” Speaker John Boehner said. “It’s long past time for President Obama to lead, address the divisions within his own party, and bring everyone together to enact a permanent solution for students and their families.”
While student rates doubled, President Obama has refused to address the issue. Instead, he held a press conference yesterday to speak about his effort to modernize government databases. Sigh.